Four Essays on Financing for Development

This thesis aims at investigating empirically the effects of two financing strategies for developing countries; debt relief and taxation. The first three chapters focus on the consequences of debt relief for public finance and new external borrowing. Results show that cancellations granted under the multilateral debt relief initiatives have been beneficial for recipient governments by significantly improving the composition of their budget and widening financing opportunities. However, findings also underline the risk of moral hazard stemming from these initiatives and thus call for continuous sound fiscal management, especially after debt relief. Lastly, the fourth chapter revisits the taxation-growth nexus adopting a macro-micro approach. Using firm-level data in developing countries, our findings suggest that taxation is favorable to firms’ activity, especially when firms operate in poor countries characterized by a significant lack of infrastructure. Moreover, this effect of taxation seems to be maximal in the absence of corruption, hence reaffirming the need for healthy and enabling economic and political environments in developing countries.

Keywords : Public finance, debt relief, taxation, external financing, conditionality, moral hazard, firm performance, low-income countries.